The latest turn of Andrea Orcel, the Roman banker who wants to create a European colossus after his legal battle with Banco Santander

The resume of Andrea Orcel as one of Europe’s great bankers is full of unexpected turns and the announcement yesterday of a takeover bid by UniCredit to take over its rival BPM is just the latest of them. Orcel has set out to create a great colossus of European banking, ahead of others such as Banco Santander, based on mergers and acquisitions and this recent movement allows it to advance on that path.

He already showed signs of this last September, when a 21% stake in the German Commerzbank surfaced, leaving in the air a proposal to acquire it that has not yet occurred. Now Orcel, whose signing for Santander ended in frustration and with a bitter judicial war, has put on the table 10.1 billion euros payable entirely in shares to take over Italy’s third largest financial services group by assets and to set the pace in Europe.

“The tailwinds from higher interest rates that have boosted revenues are fading and UniCredit is looking for a new value creation strategy. A modus operandi appears to be emerging that points to external collaboration and mergers and acquisitions “In addition, UniCredit created a similar qualified stake in Alpha Bank earlier this year, which also opens up future options,” he noted. Marco TroiannoCFA of the rating agency Scope Ratings, in a recent comment on the Roman banker’s strategy.

If the operation with BPM is completed – scheduled for summer 2025 -, a group of 97,000 employees, 4,763 branches and more than 19 million customers would be created, according to calculations made by The Corriere della Sera.

Orcel’s efforts since assuming the position of CEO in April 2021 have taken UniCredit to a new golden stage after the impact of the 2008 financial crisis that shook the country’s entire banking system. The figures speak for themselves: the entity closed 2023 with a record profit, recorded profits of 2,513 million euros in the third quarter of 2024 (8.2% more) and aspires to end the year with more than 9,000 million euros in profits.

Its performance on the stock market is not far behind either, despite yesterday’s 4.8% decline: so far this year its shares have risen almost 45%, although since 2021 they have accumulated a revaluation of 474%, which places their price at 36.28 euros and its capitalization at almost 60,000 million euros. If the takeover bid goes ahead, the capitalization of the new bank would exceed that of Intesa Sanpaoloone of its great rivals in the country, and would also leave behind Banco Santander (68.7 billion euros), which does not lose sight of the movements of the transalpine rival.

The Corriere della Sera also pointed out yesterday that Orcel’s offer for BPM “demonstrates its ability to play at the poker tableblocking with the rule of passivity the movements of Banco BPM, which has just bought 5% of MPS and, above all, has just launched a takeover bid for Anima, the Milanese wealth manager.

Orcel handles the rules of the game with exquisite agility and has endorsed the discourse on cross-border banking unity that the European Central Bank (ECB) has been agitating for some time. The announcement of the takeover bid by BPM is also based on that story: “Europe needs stronger and bigger banks that help it develop its economy and help it compete against the other large economic blocks,” declared the CEO of UniCredit when it became public. the proposal.

In any case, he will not have it easy even within his country, because a part of the Italian Government, with Matteo Salvini at the head, was yesterday frontally against the takeover bid due to the impact on banking competition, and the position of the board of directors of Banco BPM, which will meet this Tuesday, remains to be known.

Caution is imposed among analysts. “This acquisition will have a limited impact on UniCredit’s capital buffers due to the all-share structure, but there are potential concerns about concentration risk and spreads. I would expect the acquisition to have a positive impact on credit spreads. of Banco BPM, although the share premium is modest,” he points out in a comment Filippo Maria Alloatti, Director of Finance for Credit of Federated Hermes Limited.

From Bankinter, Rafael Alonso emphasizes that “the operation makes strategic and financial sense, since it would allow UniCredit to gain scale and save costs in its natural market (Italy) with a reduced execution/integration risk and an interesting profitability”, but he also considers that Orcel “will have to improve the offer (perhaps with exchange and payment in cash) for the operation to be successful.”

The proposal contemplates the payment of 0.175 newly issued shares of UniCredit for each share of Banco BPM, which implies a price of 6.657 euros per share. In this way, the premium offered over the closing price of Banco BPM shares last Friday would be around 0.5% and would be around 15% over the unchanged BPM share price on November 6, before the announcement of the acquisition offer of Anima by this entity. UniCredit expects to incur integration costs of around €2 billion gross during the first year, and to assume incremental provisions for credit losses of at least €800 million gross.